?

Log in

No account? Create an account

Previous Entry | Next Entry

In The Economics of Enough, Diane Coyle presents a manifesto of enough, a set of proposals for governments that should be implemented to make the world a better place.

Given that last week our Government presented an emergency budget, setting out measures it proposes to the same end, I thought it might be interesting to evaluate the budget against the manifesto.


I looked at this document, which sets out the policy considerations behind the budget:
https://www.gov.uk/government/publications/summer-budget-2015/summer-budget-2015#budget-policy-decisions
I have abbreviated or summarised Coyle’s points, which are set out at more length in the last three pages of her book.

  1. Measure Progress: Coyle wants governments to commit to selecting a set of indicators to supplement GDP as measures of human wellbeing, and comment on them in the annual budget. A quick scan of the budget policy considerations and decisions indicates that they are all financial and economic. There is no reference to environmental or social considerations.


  1. Ensure official statistical agencies are resourced and required to develop intergenerational and non-monetary statistics. There is no mention of anything like this.


  1. Encourage increased savings by individuals. There are some technical measures affecting the ways individuals save (changes to the way dividends are taxed, changes to the way tax relief is extended to buy-to-let landlords). Overall, however, this budget has nothing substantial to say on this point.


  1. Ensure the tax system encourages businesses to invest, and to do so over a longer time period than currently. The budget increased the Annual Investment Allowance, and committed to maintaining the allowance at this level for the rest of this five-year Parliament. Also to publish a ‘business tax roadmap’ by 2016, setting out plans for business taxation over the rest of the Parliament. Both of these measures should help businesses with longer-term investment planning.


  1. Make public service a priority. There will be a Spending Review with a view to creating a more efficient public sector. There is little detail in this document, but third-party commentary on the budget suggests that cost-cutting objectives combined with guarantees of funding in certain areas will in face reduce public services in other areas and overall, particularly for those currently dependent on the state. Whether Coyle’s priority has been met here or not would need much more information, and would be a political judgement.


  1. Address extremes of income inequality. The document suggests that overall the tax system is increasing its burden on the rich while maintaining the share of taxes paid by the poor. Most of the specific measures that affect individuals either increase the amount of tax collected or reduce expenditure that benefits them. It looks to me as if people who have more money will pay more tax, while those who have less will receive less help through the tax system. I don’t have enough information and can’t come to an overall conclusion on this one. Commentators differ.


  1. Experiment in the use of the internet to engage citizens more directly in public policy. I don’t know if the fact that I have access to this document via the internet constitutes an experiment. But I am at least able to make my own judgement, and do not have to rely entirely on third party interpretations.


  1. Consider introducing or making greater use of institutions with an explicit duty to take account of the long term and future generations. The Office of Budget Responsibility is tasked with this, and the document includes references to a number of OBR tables. However, there is no specific reference to any future after the end of the Parliament, nor intergenerational analysis, in this document. I have seen commentary elsewhere (including a report from the OBR itself) that suggests that overall the measures are skewed to benefit older people while removing support for younger people, which might not support Coyle’s aims on this point.


  1. Reform international economic institutions to improve legitimacy and encourage longer-term thinking. Not the function of the budget.


  1. Address climate change. The document claims to support global action on climate change, but focuses on value for the taxpayer, without discussing the criteria by which that value might be assessed. There are measures that affect current state support for renewable energy and carbon reduction schemes, and seek to encourage energy efficiency. I can’t judge this one either. Commentary suggests the effects are likely to be detrimental to renewable energy industry in this country, but again this would be a political judgement.

In conclusion, the budget clearly meets Coyle’s manifesto on only one of these ten points: on encouraging business investment (number 4). The budget is irrelevant to two points, on developing non-monetary statistics and reforming international economic institutions (numbers 2 and 9). Measures relating to the remaining seven points either ignore the requirements of the manifesto or cannot be evaluated without more information and understanding than I possess.

I have a general understanding of the impact of budget from various news sources that might or might not be objectively accurate. It is that overall over the next four years the amount of tax taken by the government will increase across the board, and the amount paid out in support of the vulnerable and young will be reduced. Those individuals who will see most benefit will be people inheriting personal homes. Families with children who will see the state’s financial support now withdrawn will lose most. Young adults will lose direct state support across the board, and may or may not benefit from more, better jobs. National investment in renewable energy and carbon reduction may be damaged, and the capacity of the state to have a positive impact or mitigate negative impacts on our shared environment will be reduced overall.

I don’t think Coyle will feel her manifesto has been met by this budget.

Acknowledgement
This exercise is possible for a layperson like myself only thanks to the internet (although I doubt that Coyle envisaged this particular development of her point 7 above). I probably wouldn't have done this if andrew_ducker had not published the link to the document that sets out the policy considerations behind the budget. Thank you Andrew.

Profile

coth
Caroline M

Latest Month

October 2017
S M T W T F S
1234567
891011121314
15161718192021
22232425262728
293031